Exhibit
10.220


 


Execution Version


 


FIRST AMENDMENT


 


TO


 


SECOND AMENDED AND RESTATED
CREDIT AGREEMENT


 


Dated as of December 22,
2009


 


AMONG


 


RESACA EXPLOITATION, INC.,


 


AS BORROWER,


 


RESACA OPERATING COMPANY,


 


AS GUARANTOR,


 


CIT CAPITAL USA INC.,


 


AS ADMINISTRATIVE AGENT


 


AND


 


THE LENDERS PARTY HERETO


 

















 


FIRST AMENDMENT TO SECOND AMENDED AND
RESTATED CREDIT AGREEMENT


 


THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this “First
Amendment”), dated as of December 22, 2009, is among Resaca
Exploitation, Inc., a Texas corporation (“Borrower”), Resaca
Operating Company, a Texas corporation (the “Guarantor”), each of the
lenders party to the Credit Agreement referred to below (collectively, the “Lenders”),
and CIT Capital USA Inc., as administrative agent for the Lenders (in such
capacity, together with its successors in such capacity, the “Administrative
Agent”).


 


R E C I T A L S


 


A.            The Borrower, the Administrative
Agent and the Lenders are parties to that certain Second Amended and Restated Credit
Agreement dated as of June 26, 2009 (the “Credit Agreement”),
pursuant to which the Lenders have made certain loans and extensions of credit
available to and on behalf of the Borrower.


 


B.            The Borrower and the Guarantor have requested
and the Administrative Agent and the Lenders have agreed to amend and waive certain
provisions of the Credit Agreement.


 


C.            NOW, THEREFORE, to induce the Administrative
Agent and the Lenders to enter into this First Amendment and in consideration
of the premises and the mutual covenants herein contained, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


 


Section 1.                  Defined Terms.  Each capitalized term used herein but not
otherwise defined herein has the meaning given such term in the Credit
Agreement, as amended by this First Amendment. 
Unless otherwise indicated, all section references in this First
Amendment refer to sections of the Credit Agreement.


 


Section 2.                  Amendments to Credit Agreement.


 


2.1           Amendments to Section 1.1.


 


(a)     The
definition of “Agreement” is hereby amended in its entirety to read as
follows:


 


“Agreement”
means this Second Amended and Restated Credit Agreement, as amended by that
certain First Amendment and as the same may be amended or supplemented from
time to time.


 


(b)      The
following definition is hereby added where alphabetically appropriate to read
as follows:


 


“First
Amendment” means that certain First Amendment to Second Amended and
Restated Credit Agreement, dated as of December 22, 2009, among


 

















 


the
Borrower, the Guarantor, the Administrative Agent and the Lenders party
thereto.


 


2.2           Monthly Reporting of Cash Balances.  Section 8.2(n) is hereby added which reads as
follows:


 


(n)           Monthly Cash Balances.  Within ten (10) Business Days after the
end of each calendar month, a statement of a Responsible Officer certifying
that the Borrower had, on a Consolidated basis, aggregate cash and Cash
Equivalents on hand as of the last day of the immediately preceding calendar
month of not less than $500,000 and attaching statements of the financial
institutions or securities intermediaries where such cash and Cash Equivalents
are held demonstrating such balance.


 


2.3           Amendments to Section 9.11.  Section 9.11 is hereby amended to read as
follows:


 


Section 9.11           Financial Covenants.


 


(a)           Current Ratio.  The Borrower will not permit the ratio of (i) aggregate
consolidated current assets (including any amounts available hereunder not
dedicated to Approved Development Activities) to (ii) aggregate
consolidated current liabilities (excluding current maturities of the Notes) to
be less than 1.0 to 1.0 at any time.  For
purposes of this calculation the mark-to-market portion of any Hedge Contract
shall be excluded from the calculation of both consolidated current assets and
consolidated current liabilities.


 


(b)           Debt to Consolidated EBITDA Ratio.  As of the end of each Fiscal Quarter,
commencing December 31, 2009, the Borrower will not permit the ratio of (i) Consolidated
Funded Indebtedness (other than Indebtedness permitted under Section 9.1(b)),
including the Obligations, to (ii) Consolidated EBITDA, to be greater than
(A) 6.5 to 1.0 for the Fiscal Quarter ending December 31, 2009, (B) 6.0
to 1.0 for the Fiscal Quarters ending March 31, 2010 and June 30,
2010, (C) 5.5 to 1.0 for the Fiscal Quarter ending September 30,
2010, and (D) 5.0 to 1.0 for the Fiscal Quarter ending December 31,
2010 and each Fiscal Quarter thereafter; provided that
Consolidated EBITDA for the Fiscal Quarters ending December 31, 2009, March 31,
2010, and June 30, 2010 shall be calculated as follows:


 


(i)            for
the Fiscal Quarter ending December 31, 2009, Consolidated EBITDA shall be
Consolidated EBITDA for the four-month period ending on such date multiplied by
three.


 


(ii)           for
the Fiscal Quarter ending March 31, 2010, Consolidated EBITDA shall be
Consolidated EBITDA for the seven-month period ending on such date multiplied
by twelve/ sevenths.


 


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(iii)          for
the Fiscal Quarter ending June 30, 2010, Consolidated EBITDA shall be
Consolidated EBITDA for the ten-month period ending on such date multiplied by
1.2.


 


Thereafter, Consolidated
EBITDA for each Fiscal Quarter shall be calculated using Consolidated EBITDA
for the period of four Fiscal Quarters ending on the last day of such Fiscal
Quarter.


 


(c)           Interest Coverage Ratio.  As of the end of each Fiscal Quarter,
commencing December 31, 2009, the Borrower will not permit the ratio of (i) Consolidated
EBITDA to (ii) cash interest payments (other than interest payments on
Indebtedness permitted under Section 9.1(b)) (“Interest Expense”)
made during such period, to be less than (A) 1.75 to 1.0 for the Fiscal
Quarter ending December 31, 2009, and (B) 2.0 to 1.0 for each Fiscal
Quarter thereafter; provided that
Consolidated EBITDA and Interest Expense for the Fiscal Quarters ending December 31,
2009, March 31, 2010, June 30, 2010 shall be calculated as follows:


 


(i)            for
the Fiscal Quarter ending December 31, 2009, Consolidated EBITDA and
Interest Expense shall be Consolidated EBITDA and Interest Expense for the
four-month period ending on such date multiplied by three.


 


(ii)           for
the Fiscal Quarter ending March 31, 2010, Consolidated EBITDA and Interest
Expense shall be Consolidated EBITDA and Interest Expense for the seven-month
period ending on such date multiplied by twelve/ sevenths.


 


(iii)          for
the Fiscal Quarter ending June 30, 2010, Consolidated EBITDA and Interest
Expense shall be Consolidated EBITDA and Interest Expense for the ten-month
period ending on such date multiplied by 1.2.


 


Thereafter, Consolidated
EBITDA and Interest Expense for each Fiscal Quarter shall be calculated using
Consolidated EBITDA and Interest Expense for the period of four Fiscal Quarters
ending on the last day of such Fiscal Quarter.


 


(d)           Asset Coverage Ratio.  The Borrower will not, as of any date of
determination, permit its ratio of Total Reserve Value to Consolidated Funded
Indebtedness (other than Indebtedness permitted under Section 9.1(b)),
including the Obligations as of such date to be less 1.75 to 1.00.


 


(e)           G & A Expenses.  The Borrower will not permit the general and
administrative expenses of the Borrower and its Subsidiaries on a consolidated
basis to exceed $2,500,000 per year for the year following the Closing Date; provided that such general and administrative expenses can
be increased by $250,000 each successive 12-month period so long as the
Borrower is not in Default under this Section 9.11.  General and administrative expenses for
purposes of this Section 9.1(e) shall not include non-cash items or
transaction 


 


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costs,
expenses and charges with respect to acquisitions deducted from Consolidated
Net Income pursuant to SFAS 141(R), provided that such exclusion from general
and administrative expenses for such non-cash items, transaction costs,
expenses and charges incurred after December 22, 2009 shall not exceed
$400,000 in the aggregate.  For purposes
of this Section 9.1(e) any general and administrative expenses
incurred by the Borrower on behalf of any related Person and not reimbursed to
the Borrower in cash within sixty (60) days after the incurrence thereof shall
be included in the general and administrative expenses of the Borrower.


 


(f)            Minimum Monthly Cash Balance.  As of the close of business on the last day
of each calendar month, commencing with the calendar month of January, 2010,
the Borrower will not permit its sum of aggregate cash on hand plus Cash
Equivalents to be less than $500,000.


 


Section 3.                  Covenant Waivers.


 


3.1           The Borrower has informed the Administrative Agent that it
is unable to comply with Section 9.11(b) [Debt to Consolidated EBITDA Ratio]
and Section 9.11(c) [Interest Coverage Ratio] for the Fiscal Quarter ending
September 30, 2009 (the “Designated Defaults”).  Therefore, the Borrower hereby requests, and
the Administrative Agent and the Lenders hereby agree to waive the Designated
Defaults.  Except as expressly waived
herein, all covenants, obligations and agreements of the Borrower contained in
the Credit Agreement and the other Loan Documents shall remain in full force
and effect in accordance with their terms.


 


3.2           Neither the execution by the Administrative Agent or the
Lenders of this First Amendment, nor any other act or omission by the
Administrative Agent or the Lenders or their officers in connection herewith,
shall be deemed a waiver by the Administrative Agent or the Lenders of any
other defaults which may exist, which may have occurred prior to the Designated
Defaults or which may occur in the future under the Credit Agreement and/or the
other Loan Documents, or any future defaults of the same provision waived
hereunder (collectively “Other Violations”).  Similarly, nothing contained in this First
Amendment shall directly or indirectly in any way whatsoever either: (i)
impair, prejudice or otherwise adversely affect the Administrative Agent’s or
the Lenders’ right at any time to exercise any right, privilege or remedy in
connection with the Loan Documents with respect to any Other Violations, (ii)
amend or alter any provision of the Credit Agreement, the other Loan Documents,
or any other contract or instrument, or (iii) constitute any course of dealing
or other basis for altering any obligation of the Borrower or the Guarantor or
any right, privilege or remedy of the Administrative Agent or the Lenders under
the Credit Agreement, the other Loan Documents, or any other contract or
instrument.  Nothing in this letter shall
be construed to be a consent by the Administrative Agent or the Lenders to any
Other Violations.


 


Section 4.                  Conditions Precedent.  This First Amendment shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 12.02 of the Credit Agreement):


 


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4.1           The Administrative
Agent shall have received from each party hereto, counterparts (in such number
as may be requested by the Administrative Agent) of this First Amendment signed
on behalf of such Person.


 


4.2           The Administrative
Agent shall have received for the ratable benefit of the Lenders (to be shared
based upon each Lender’s respective Percentage Share) an amendment and waiver
fee equal to $87,500 and all other fees and other amounts due and payable,
including, to the extent invoiced, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including, without limitation, the fees and expenses of Vinson &
Elkins L.L.P., counsel to the Administrative Agent).


 


4.3           At the time of and
immediately after giving effect to the terms of this First Amendment, no
Default shall have occurred and be continuing.


 


4.4           The Administrative
Agent shall have received such other documents as the Administrative Agent or
its special counsel may reasonably require.


 


The
Administrative Agent is hereby authorized and directed to declare this First
Amendment to be effective when it has received documents confirming or
certifying, to the satisfaction of the Administrative Agent, compliance with
the conditions set forth in this Section 4 or the waiver of such
conditions as permitted hereby. Such declaration shall be final, conclusive and
binding upon all parties to the Credit Agreement for all purposes.


 


Section 5.                  Miscellaneous.


 


5.1           Confirmation. 
The provisions of the Credit Agreement, as amended by this First
Amendment, shall remain in full force and effect following the effectiveness of
this First Amendment.


 


5.2           Ratification and Affirmation; Representations and
Warranties.  Each of the Borrower and
the Guarantor hereby (a) acknowledges the terms of this First Amendment; (b) ratifies
and affirms its obligations under, and acknowledges, renews and extends its
continued liability under, each Loan Document to which it is a party and agrees
that each Loan Document to which it is a party remains in full force and
effect, except as expressly amended hereby, notwithstanding the amendments
contained herein and (c) represents and warrants to the Lenders that as of
the date hereof, after giving effect to the terms of this First Amendment:  (i) all of the representations and
warranties contained in each Loan Document to which it is a party are true and
correct, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, such representations and
warranties shall continue to be true and correct as of such specified earlier
date, (ii) no Default or Event of Default has occurred and is continuing
and (iii) no event or events have occurred which individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect.


 


5.3           Counterparts. 
This First Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same instrument.  Delivery of this First Amendment by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.


 


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5.4           NO ORAL AGREEMENT. 
THIS FIRST AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS
EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO SUBSEQUENT ORAL AGREEMENTS
BETWEEN THE PARTIES.


 


5.5           GOVERNING LAW. 
THIS FIRST AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND
ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.


 


5.6           Payment of Expenses.  The Borrower agrees to pay or reimburse the
Administrative Agent for all of its out-of-pocket costs and expenses incurred
in connection with this First Amendment, any other documents prepared in
connection herewith and the transactions contemplated hereby, including,
without limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent.


 


5.7           Severability. 
Any provision of this First Amendment which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.


 


5.8           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and its respective successors and
assigns.


 


5.9           RELEASE
OF LENDERS.    IN CONSIDERATION OF THIS
FIRST AMENDMENT AND, SUBJECT TO THE CONDITIONS STATED HEREIN, EACH OF THE
BORROWER AND THE GUARANTOR HEREBY RELEASES, ACQUITS, FOREVER DISCHARGES, AND
COVENANTS NOT TO SUE, THE ADMINISTRATIVE AGENT AND EACH OF THE LENDERS, ALONG
WITH ALL OF THEIR BENEFICIARIES, OFFICERS, DIRECTORS, AGENTS, EMPLOYEES,
SERVANTS, ATTORNEYS AND REPRESENTATIVES, AS WELL AS THEIR RESPECTIVE HEIRS,
EXECUTORS, LEGAL REPRESENTATIVES, ADMINISTRATORS, PREDECESSORS IN INTEREST,
SUCCESSORS AND ASSIGNS (EACH INDIVIDUALLY, A “RELEASED PARTY” AND
COLLECTIVELY, THE “RELEASED PARTIES”)
FROM ANY AND ALL CLAIMS, DEMANDS, DEBTS, LIABILITIES, SUITS, OFFSETS AGAINST
THE INDEBTEDNESS EVIDENCED BY THE LOAN DOCUMENTS AND ACTIONS, CAUSES OF ACTION
OR CLAIMS FOR RELIEF OF WHATEVER KIND OR NATURE, WHETHER KNOWN OR UNKNOWN,
SUSPECTED OR UNSUSPECTED BY BORROWER OR THE GUARANTOR, WHICH THE BORROWER, THE
GUARANTOR, OR ANY SUBSIDIARY MAY HAVE OR WHICH MAY HEREAFTER ACCRUE
RELATED TO ANY ACTIONS OR FACTS OCCURRING PRIOR TO THE DATE OF THIS FIRST
AMENDMENT AGAINST ANY RELEASED PARTY, FOR OR BY REASON OF ANY MATTER, CAUSE OR
THING 


 


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WHATSOEVER
OCCURRING ON OR PRIOR TO THE DATE OF THIS FIRST AMENDMENT, WHICH RELATE TO, IN
WHOLE OR IN PART, DIRECTLY OR INDIRECTLY THE CREDIT AGREEMENT, ANY NOTE, ANY
SECURITY DOCUMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS EVIDENCED
THEREBY, INCLUDING, WITHOUT LIMITATION, ANY DISBURSEMENTS UNDER THE CREDIT
AGREEMENT, ANY NOTES, THE NEGOTIATION OF ANY OF THE CREDIT AGREEMENT, THE
NOTES, OR THE OTHER LOAN DOCUMENTS, THE TERMS THEREOF, OR THE APPROVAL,
ADMINISTRATION, ENFORCEMENT OR SERVICING THEREOF.


 


[SIGNATURES BEGIN NEXT PAGE]


 


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IN
WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed as of the date first written above.


 


 


	
   

  	
  RESACA EXPLOITATION, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Lou Fry

  
	
   

  	
  Name: Mary Lou Fry

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  RESACA OPERATING COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mary Lou Fry

  
	
   

  	
  Name: Mary Lou Fry

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CIT CAPITAL USA INC.,

  
	
   

  	
  as the Administrative
  Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ GE Mckean

  
	
   

  	
  Name: George E. Mckean

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  CIT BANK,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Benjamin Haslam

  
	
   

  	
  Name: Benjamin Haslam

  
	
   

  	
  Title: Authorized
  Signatory 

  



 


Signature
Page to First Amendment to Second Amended and Restated Credit Agreement


(Resaca
Exploitation, Inc.)


 

















 


	
   

  	
  NGP CAPITAL RESOURCES COMPANY,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Kelly Plato

  
	
   

  	
  R. Kelly Plato, as Senior
  Vice President

  



 


Signature
Page to First Amendment to Second Amended and Restated Credit Agreement


(Resaca
Exploitation, Inc.)